Constructing Demand Curves from a Single Observation of Bundle Sales
Firms typically require multiple sales observations under varying prices to understand how the demand for their items respond to price. In this paper, our partner online retailer is faced with the problem of reconstructing demand curves when only a single point on each curve has been historically observed. We show how a second point on each curve can be extracted from the sales of their discounted bundles, after which we help them estimate linear demand curves for their items. We perform this extraction by fitting a multi-item valuation model from the bundle pricing literature, introducing a new iterative procedure for solving this fitting problem. Our extraction process reveals a new insight on the relationship between an item's relative frequency of bundle sales vs. the steepness of its demand curve around its current price. We validate this insight on the data provided by our partner firm
Year of publication: |
2020
|
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Authors: | Ma, Will ; Simchi-Levi, David |
Publisher: |
[S.l.] : SSRN |
Subject: | Theorie | Theory | Leistungsbündel | Bundling strategy | Nachfrage | Demand | Preismanagement | Pricing strategy |
Saved in:
freely available
Extent: | 1 Online-Ressource (54 p) |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 14, 2016 erstellt |
Other identifiers: | 10.2139/ssrn.2754279 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10014128367
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